Superannuation, the ultimate government cash cow?

[sptrawler]

In todays Sunday paper a reader asks the question, why contribute more to super, when even if you have a lot in super it wont earn anywhere near as much as the age pension.
The answer from the expert, was the theory is correct, but the age pension will change in the future.
I agree it will change, the age pension will go up and the amount of money you are allowed to have to qualify will go down.

 

[sptrawler]

This is a timely reminder for people who are think about starting a SMSF, if you are going to leave the investing and control of your money to a third party, you may be better off just having your money in a recognised industry or retail super fund.
Just my opinion.
https://www.abc.net.au/news/2020-08...rannuation-through-financial-adviser/12594060

 

[Skate]

This will be important to a few
Amendments to the Income Tax Assessment Act 1997 enables individuals aged 65 and 66 to make non-concessional superannuation contributions. So good so far, but the proposed changes to the Bill to enable individuals aged 65 and 66 to make up to three years of non-concessional superannuation contributions under the bring-forward rule is NOT legislated yet.

You can check the progress of this proposed bill change via the official treasury website https://www.aph.gov.au/Parliamentar...slation/Bills_Search_Results/Result?bId=r6538.

The Bill progress in the House of Representatives
1. Introduced & read a first time on the 13th May 2020
2. Second reading moved 13th May 2020
3. Second reading debate 25th Aug 2020

Third reading
Prepared if the bill is amended by the house in which it was introduced. This version of the bill is then considered by the second house.

As passed by both houses
Final text of bill agreed to by both the House of Representatives and the Senate which is presented to the Governor-General for assent.

Skate.

 

[Belli]

This is a timely reminder for people who are think about starting a SMSF, if you are going to leave the investing and control of your money to a third party, you may be better off just having your money in a recognised industry or retail super fund.
Just my opinion.
https://www.abc.net.au/news/2020-08...rannuation-through-financial-adviser/12594060

A sad tale and yes it may be they were not suited to be Trustees of a superannuation fund.

So many do not understand the implications of the requirement of a being a Trustee and I suspect the majority do not even refer to the fund's Trust Deed once the fund is established. A short synopsis of the many clauses in the Deed is "You're on your own, Sunshine" when it comes to investing matters.

 

[SirRumpole]

In todays Sunday paper a reader asks the question, why contribute more to super, when even if you have a lot in super it wont earn anywhere near as much as the age pension.
The answer from the expert, was the theory is correct, but the age pension will change in the future.
I agree it will change, the age pension will go up and the amount of money you are allowed to have to qualify will go down.

The age pension will never go down, but the qualifying age is going to rise.

It will be 70 by 2025.

https://www.aph.gov.au/about_parlia...pubs/rp/budgetreview201415/pensioners?print=1

 

[PZ99]

The age pension will never go down, but the qualifying age is going to rise.

It will be 70 by 2025.

https://www.aph.gov.au/about_parlia...pubs/rp/budgetreview201415/pensioners?print=1

Not anymore. To his credit, Scomo dropped this Abbott policy because he saw it for what it was... putrid.

If you're retrenched at 60 and the pension age is 70 you have to live on your super for 10 years so it would only be a matter of time before the super preservation age would be raised as well.

Any attempts to do either should be resisted and will be.

 

[sptrawler]

Not anymore. To his credit, Scomo dropped this Abbott policy because he saw it for what it was... putrid.

If you're retrenched at 60 and the pension age is 70 you have to live on your super for 10 years so it would only be a matter of time before the super preservation age would be raised as well.

Any attempts to do either should be resisted and will be.

The only ones with any chance of getting it through would be Labor, but even then they would have to have the unions on side, which is becoming more and more difficult.
I was made redundant at 55(9 years ago) and am still living off super, ATM it is a real pinch, with returns as low as they are.

 

[PZ99]

The only ones with any chance of getting it through would be Labor, but even then they would have to have the unions on side, which is becoming more and more difficult.
I was made redundant at 55(9 years ago) and am still living off super, ATM it is a real pinch, with returns as low as they are.

Not much fun. So thanks to Labor you have to wait another year and a half before getting the pension if my maths is correct? I was against that KRudd policy as well even if it meant a rise of some 30 a week.

Politicians need to get it. Move the pension age back to 65 but offer tax incentives to work beyond that if you want / need to

Unions are now as we speak publicly divorcing Labor in QLD citing a disconnect from working people - much like the voters are

 

[sptrawler]

Not much fun. So thanks to Labor you have to wait another year and a half before getting the pension if my maths is correct? I was against that KRudd policy as well even if it meant a rise of some 30 a week.

Politicians need to get it. Move the pension age back to 65 but offer tax incentives to work beyond that if you want / need to

Unions are now as we speak publicly divorcing Labor in QLD citing a disconnect from working people - much like the voters are

The whole problem revolves around encouraging people to work, not encouraging them to chase welfare, as can be seen with jobkeeper it is a recipe for disaster.
I could have gone onto disability and my wife could have received carers allowance, but i wouldn't have the amount in super I have, if I was that sort of person.
Not blowing my own trumpet, just explaining my frustration when people like myself are demonised and made out to be lucky and selfish.
The unions are made up of workers who are trying to become self funded, Labor are trying to paint self funded as rich people and those on welfare as those most needy and special, I know with my kids they have had a gut full of it.
IMO unless Labor gets its $hit together they will lose the support of all workers, you can't keep demonising and penalising the very ones you are representing, while at the same time taking more off them to support those who have no intention of working.
Super has to be for the workers benefit, not just another indirect tax on those who have worked all their lives and paid taxes.

 

[SirRumpole]

IMO unless Labor gets its $hit together they will lose the support of all workers, you can't keep demonising and penalising the very ones you are representing, while at the same time taking more off them to support those who have no intention of working.

Yes, well said.

Welfare for those who need it , but someone has to pay for it.

I think Joel Fitzgibbon is right.

Labor has to speak more to the aspirationals, and give them cause to believe that they may get reward for effort in studying and working hard and improving their lot in life.

I'd hate to see Albo making the same mistake as Shorten did in ignoring the centre ground. That doesn't mean that Labor shouldn't do anything about the disaffected when in government, just that they should appeal to a wider group of voters otherwise they won't get into government in the first place.

 

[sptrawler]

I'd hate to see Albo making the same mistake as Shorten did in ignoring the centre ground. That doesn't mean that Labor shouldn't do anything about the disaffected when in government, just that they should appeal to a wider group of voters otherwise they won't get into government in the first place.

Just be realistic IMO, you can't just say anyone not on welfare is rich and anyone on welfare is there because of circumstances outside their control.
It is fast approaching the point where it is detrimental for workers to put extra into super, it may well financially be more sensible to pay down debt and aim for maximum pension.
The problem with that is, the lack of incentive causes a lack of endeavour which results in a huge drop in productivity. Having welfare as a lifestyle choice, which isn't much different to a working lifestyle, will end up with one outcome.
Just my opinion.

 

[Skate]

This will be important to a few
Amendments to the Income Tax Assessment Act 1997 enables individuals aged 65 and 66 to make non-concessional superannuation contributions. So good so far, but the proposed changes to the Bill to enable individuals aged 65 and 66 to make up to three years of non-concessional superannuation contributions under the bring-forward rule is NOT legislated yet.

You can check the progress of this proposed bill change via the official treasury website https://www.aph.gov.au/Parliamentar...slation/Bills_Search_Results/Result?bId=r6538.

The Bill progress in the House of Representatives
1. Introduced & read a first time on the 13th May 2020
2. Second reading moved 13th May 2020
3. Second reading debate 25th Aug 2020

Third reading
Prepared if the bill is amended by the house in which it was introduced. This version of the bill is then considered by the second house.

As passed by both houses
The final text of bill agreed to by both the House of Representatives and the Senate which is presented to the Governor-General for assent.

Skate.

Amendments to the Income Tax Assessment Act 1997
When this Bill is finally passed it will enable individuals aged 65 and 66 to make up to three years of non-concessional superannuation contributions under the "bring-forward rule".

The Bill PREVIOUS progress in the House of Representatives
1. Introduced & read a first time on the 13th May 2020
2. Second reading moved 13th May 2020
3. Second reading debate 25th Aug 2020

The Bill UPDATED progress in the House of Representatives
4. Second reading debate 27 Aug 2020
5. Second reading debate 31 Aug 2020
6. Second reading agreed to 31 Aug 2020
7. Third reading agreed to 31 Aug 2020

Summary
The amendment to the Bill is one step closer. The passing of this Bill may be trivial to some but not to others.

Skate.

 

[macca]

I have not drilled right down into it but in NZ everyone gets the aged pension but it is added to any other income.

Seems reasonable, live on the pension or work a bit, whatever the personal choice.

If people save any cash for their old age or blow the lot, they still get the same pension

 

[sptrawler]

I guess the only upside is, it is only the kids inheritance, after this hit the only thing to be sorted will be the PPR.

I think this is the first steps along the PPR asset test road, time will tell, but tying the PPR to any super concession is opening the door to future changes IMO.

https://www.smh.com.au/money/super-...8-p55tl2.html?js-chunk-not-found-refresh=true

 

[PZ99]

I have not drilled right down into it but in NZ everyone gets the aged pension but it is added to any other income.

Seems reasonable, live on the pension or work a bit, whatever the personal choice.

If people save any cash for their old age or blow the lot, they still get the same pension

It sounds like a better system. Retire at 65 and earn around $25k a year for singles + your other income and pay the relevant income tax.

https://www.enz.org/new-zealand-pension.html

 

[sptrawler]

It sounds like a better system. Retire at 65 and earn around $25k a year for singles + your other income and pay the relevant income tax.

https://www.enz.org/new-zealand-pension.html

The NZ, U.K and Canada have a similar system.
Australia had the same or similar pension system, before it was raided and put into consolidated revenue.
Then means tested, then disbanded and super started, from what I have read.
The whole history of Australia's pension and super system is posted in the thread a few years ago, it would take some finding, with the search function.

 

[Belli]

Yes, I'll be sitting back watching with interest to hear about the outcomes.

Ha ha. It was bound to happen.

ATO cracks down on early release super applicants who do not qualify

A survey of members of a large industry fund indicates some of those who are applying for early release of their super do not meet the ATO criteria.

www.theage.com.au

Many people are apparently impetuous and don't even bother to think of possible adverse outcomes of their decisions when they see what they believe is easily available cash.

I have not one whit of sympathy for them.

 

[sptrawler]

Ha ha. It was bound to happen.

ATO cracks down on early release super applicants who do not qualify

A survey of members of a large industry fund indicates some of those who are applying for early release of their super do not meet the ATO criteria.

www.theage.com.au

Many people are apparently impetuous and don't even bother to think of possible adverse outcomes of their decisions when they see what they believe is easily available cash.

I have not one whit of sympathy for them.

Yes, a mate of mine was shaking his head when a lot of his workmates were pulling out super, he told them not to, but you can't put an old head on young shoulders.

 

[Belli]

Yes, a mate of mine was shaking his head when a lot of his workmates were pulling out super, he told them not to, but you can't put an old head on young shoulders.

Very true. Some don't seem to realise that ATO has heaps of data and is going to use it. Transactions through your bank accounts. Emploeerys now having to provide real time data on salaries, including superannuation payments. So the ATO can analyses s if your income has or hasn't gone down, if the employer is making SG payments. And so on. If SG payments are still being made and you withdraw funds form super, it may be prudent to prepare yourself for a "Please explain..." from the ATO.

Can get such a query if you did qualify. Made redundant due to Covid 19, took funds out, lucky enough to jag another job in the interim and decided to place the funds back into super. ATO may view it as an arrangement to receive a tax benefit and apply Part iVA.

A lot to still play out I feel.

 

[Belli]

As an aside I do shake my head in wonder what some trustees of SMSF's do and whether they should even be trustees. Came across one drongo who took out the account-based pension early in the 2019-202 FY at 5%. Doesn't meet the work or any other test test. After the Government announced the halving of the minimum amount, you can guess what this character did assuming the Government decision was retrospective.